Vickery v JJP Custodians

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2966/99 GRAHAM JOHN VICKERY V JJP CUSTODIANS PTY LTD & ORS JUDGMENT 1 HIS HONOUR: Dr Vickery, the plaintiff, commenced this action in July 1999. Initially the only defendants were the first and second defendants, JJP Custodians Pty Ltd ("JJP") and Done Nantsou ("Donald"). Claims were made against the third defendant, Mr Christos Nantsou ("Christos"), by an amended statement of claim filed in December 2000. 2 Donald has not contested Dr Vickery's claims against him. Dr Vickery has entered judgment against him, together with an order that damages be assessed, the judgment taking effect on 7 December 2000. Dr Vickery's claims against JJP were settled shortly before the hearing, and on 30 July 2002 judgment was entered for JJP on terms not to be disclosed. The dispute remaining for adjudication is between Dr Vickery and Christos. 3 The dispute arises out of a loan agreement purportedly entered into by JJP as lender with Christos as borrower, by his attorney under power, his son Donald. Under the loan agreement JJP made $50,000 available to Donald. Dr Vickery, who dealt with Donald from time to time in business transactions, paid $35,000 and subsequently $42,400 to JJP by arrangement with Donald, for the purposes of a project in which they were involved. JJP applied some of that money to repay the principal and interest owing to it under the loan agreement (the amount being $62,686.80). Dr Vickery seeks to recover the sum of $62,686.80 from Christos, on three bases, namely: (a) money had and received (amended statement of claim, paragraph 15); (b) money paid (paragraph 46); (c) unjust enrichment (paragraph 48-52). 4 In executing the loan agreement on his father's behalf, Donald purportedly relied on a power of attorney. Christos executed a power of attorney in favour of his son on 7 April 1994. The validity and effect of the power of attorney is in contest, and so it is appropriate to begin by examining that instrument and the circumstances of its execution. Execution of the power of attorney 5 On about 15 May 1994 Christos and his wife travelled overseas on holidays and were absent from Australia for approximately three months. Prior to his departure, Mr Nantsou instructed his solicitor, Graham Berryman, to prepare a general power of attorney appointing his son Donald as his attorney. The power of attorney was executed on 7 April 1994. 6 The document was a single page in printed form, the blanks in which were completed by typescript. On the back of the document there was a certificate by Mr Berryman, given under s 163F (2) of the Conveyancing Act 1919 (NSW), to the effect that he explained the power of attorney to Christos before it was executed. Clause 1 stated that Christos appointed Donald to be his attorney to exercise, subject to any conditions and limitations specified in the Part 2 of the instrument, the authority conferred on him by s 163B of the Conveyancing Act, "to do on my behalf anything I may lawfully authorise an attorney to do". Part 2, headed "Conditions and Limitations", contained only the word "Nil". 7 Clause 2 authorised the attorney to execute an assurance or other document or do any other act whereby a benefit was conferred on him. It was put to me by counsel for Christos that the wording of clause 2 would allow the agent to enter into a transaction in which both the agent and the principal benefited, but not a transaction wholly for the benefit of the agent. As a matter of literal construction, there is no such limitation in clause 2. 8 Neither the instrument itself, nor s 163B, imposed any relevant limitation on the power conferred on Donald to do anything that Christos could lawfully authorise him to do. The power of attorney was expressed in wide enough language to authorise Donald to execute the loan agreement with JJP on behalf of Christos. However, the power of attorney was at no stage registered under the provisions of s 163 of the Conveyancing Act 1919 (NSW). Was the power of attorney held in escrow? 9 Mr Berryman gave evidence that he attended upon Christos for the execution of the power of attorney, and afterwards he placed the document in safe custody in his office. Paragraph 4 of his affidavit made on 3 June 2002 says: "4. To the best of my knowledge and belief the said original Power of Attorney has remained in safe custody since the date of execution and has been held in escrow for use only on the instructions of the Third Defendant." No objection was taken to the admissibility of paragraph 4 and it was admitted into evidence." 10 A deed delivered in escrow is delivered conditionally, to take effect or become operative when a specified event occurs or some condition is fulfilled. It binds the maker of the deed, who cannot subsequently resile, and once the condition is fulfilled the deed becomes binding absolutely: see Butterworths Australian Legal Dictionary (1997) page 429, citing Monarch Petroleum NL v Citco Australia Petroleum Ltd [1986] WAR 310; Hooker Industrial Developments Pty Ltd v Trustees of the Christian Bros [1997] 2 NSWLR 109; Alan Estates Ltd v WG Stores Ltd [1982] Ch 511. The statement that a deed is held in escrow expresses a legal conclusion. 11 In my opinion the latter half of paragraph 4 (that is, the statement that "To the best of my knowledge and belief the said original Power of Attorney … has been held in escrow for use only on the instructions of the Third Defendant") is of no assistance on any question before me for decision. As a matter of construction of the sentence, which does not contain a comma, the words "to the best of my knowledge and belief" purport to govern the whole sentence. Therefore the statement is about Mr Berryman's knowledge and belief concerning a legal state of affairs. The facts upon which Mr Berryman formed his belief (if any evidence had been given of those facts) would be relevant to the issues before me in this case, but his state of mind concerning the facts is not relevant. Moreover, the legal effect of the facts surrounding the execution and delivery of the power of attorney is a matter for the Court rather than for any witness. 12 Mr Berryman did not give evidence of any instruction he received from Christos, which might have had the effect of causing the document to be held in escrow. His statement of knowledge and belief that the power of attorney was held in escrow "for use only on the instructions of the Third Defendant" is not, properly construed, evidence that the Third Defendant gave him any relevant instruction, such as "Use this power of attorney only if I provide you with subsequent instructions to do so". 13 Moreover, if Mr Berryman had given evidence of any such instruction, that evidence would have been inconsistent with the evidence given by Christos in paragraphs 7 and 8 of his affidavit made on 24 October 2001. I shall return to Mr Nantsou's affidavit shortly. However, it is convenient to state my conclusion on this point now. 14 In light of the evidence given by Christos, and in view of the unsatisfactory nature of the evidence given on this point by Mr Berryman, my conclusion is that the written power of attorney was not held in escrow at any stage, but rather it was an immediately operative instrument held by Mr Berryman's firm for safe keeping. Was the power of attorney terminated or varied?

The law 15 As McLelland J remarked in R D Mackinnon Holdings Pty Ltd v Hind [1984] 2 NSWLR 121, 123, "the question of whether the actual authority of an agent expressed to be conferred by a voluntary power of attorney given by deed … can be effectively varied or limited by parol is an obscure one, although it appears to be established that an agent's authority conferred by deed can be revoked informally". I hesitate to step in, given that note of caution, but it is pertinent for me to do so. 16 Text writers appear to take the view that a power of attorney by deed can be varied or terminated orally. Professor B Collier and Mr S Lindsay (Powers of Attorney in Australia and New Zealand (1992), p 220) say it appears to be established that a power given by deed may be revoked informally, even by parol, citing R v Wait (1823) 11 Price 518, 531 [147 ER 551, 555], and The Margaret Mitchell (1858) Sw 382, 401 [166 ER 1174, 1185], as well as McLelland J's comments set out above. According to Collier and Lindsay, "the rationale for this principle is that if formal revocation were necessary, the donor could be seriously prejudiced by acts of the donee in the time before preparation of the requisite instrument of revocation". 17 More categorically, Bowstead and Reynolds on Agency (16th ed by F M B Reynolds, 1996) asserts (at 673) that "the revocation may be oral whether or not the authority was conferred in writing" (citing The Margaret Mitchell and R v Wait), and states that "the rule is based on policy, and is the same as that relating to dismissal of persons working under contract of service: 'the proper conduct of the affairs of life necessitates that this should be so' [Frith v Frith [1906] AC 254, 259]". 18 In my opinion, the position was put substantially beyond doubt by the decision of the Victorian Court of Criminal Appeal in R v Julius Sefton Holt (1983) 12 A Crim R 1. In that case Mr Holt, a stockbroker in Melbourne, handled the affairs of Mr Morgan, a client living in Kenya, who had executed a power of attorney in his favour. The stockbroker bought and sold shares frequently on his client's behalf. The client wrote to him instructing him not to act otherwise than on specific instructions. Nevertheless, the stockbroker sold parcels of shares on the client's account without express instructions, and misappropriated the proceeds of the unauthorised sales. He was charged with and convicted for the theft of the sums of money concerned. On appeal, he contended unsuccessfully that he was acting with the authority conferred on him by the power of attorney. 19 Tadgell J (with whom Young CJ and Kaye J agreed) said (at 14): "A power of attorney depends for its efficacy upon the law relating to principal and agent. It is not the law that an attorney given power by instrument under seal may, so long as the instrument remains unrevoked, exercise the power it confers in disregard of any subsequent orders of his principal conveyed to him. In so far as a power of attorney confers authority on the donee as agent of the donor, it operates merely as an authority to act and not as a direction to act. Subject to any contrary sense of the instrument there always resides in the donor the right later to instruct the donee not to act on the power, or to act on it only in a stated way. … "That the effect of a power of attorney, even if given under seal, may be modified by parol is made clear by the decision of The Margaret Mitchell (1858) Sw 382 [166 ER 1174] the authority of which has so far as I am aware never been doubted. There, a power of attorney was given under seal by the owner of a ship to her master, one Stiles, who purported to sell her under authority conferred by the power of attorney. Dr Lushington, sitting in the High Court of Admiralty, found as a fact that: '… though the power of attorney was not formally revoked, yet that Captain Stiles, long before the sale, received letters informing him that he was to be dismissed, and of the owner's intention to dispose of the ship; the whole contents of those letters shew that the owner did not desire that Stiles should sell this ship under this power of attorney, and Captain Stiles's letter shews that he was about to sell the ship not in accordance with the wishes and directions of the owner, but in despite of them …' (p 400). "The learned judge continued, in a passage which I think exactly covers the present case, to say: 'I apprehend that, as a general rule, the grantee of a power of attorney is bound to follow the directions and wishes of the grantor; as, for instance, with respect to a power of attorney to sell stock, the grantee must exercise that power according to the orders of the grantor. I conceive, that to use a power of attorney contrary to the known wishes and directions of the grantor is a breach of trust.' "So here, assuming that the power of attorney given to the applicant on its face authorised him to sell Morgan's shares, that power was exercisable as between the applicant and Morgan subject to Morgan's later expressed instructions, if any. It cannot have been wrong to have left to the jury that question of fact whether Morgan conveyed to the applicant extraneously to the power of attorney a limitation of his authority to sell Morgan's shares."

The evidence 20 Christos gave evidence that he arranged for the execution of the power of attorney prior to his departure for his overseas holiday. In paragraph 7 of his affidavit made on 24 October 2001 he said that the original power of attorney was placed with his solicitors "for safe custody". I stated earlier that this is one of the two paragraphs indicating, contrary to Mr Berryman's evidence, that the power of attorney was not held in escrow. While that evidence may not be strictly inconsistent with the proposition that the power of attorney was held in escrow (since a document can be held in escrow and for safe custody), one would have thought that if there was an instruction having the effect that the instrument was to be held in escrow and not just for safe keeping, Christos would have given evidence of that instruction in paragraph 7. 21 Paragraph 8 of the affidavit by Christos was as follows: "8. I recall that in 1994 I said to my son Donald words in or to the effect of 'I want to give you power of attorney whilst your mother and myself are away overseas in case something should come up whilst we are away requiring my signature'." 22 When the affidavit was read at the beginning of the hearing, there was a contest over the admissibility of this paragraph, the issue being seen at that time as an issue about admitting contemporary parol evidence to assist in the construction of a written instrument. I deferred my ruling on the point. Later, with the Court's leave, Christos supplemented this part of his affidavit with oral evidence. He said that the conversation took place in May 1994, about a week before his departure overseas. He said that when he made the statement set out in paragraph 8, his son replied "Yes". 23 This oral evidence made it clear that the conversation deposed to in paragraph 8 of the affidavit was a conversation that occurred some time after the execution of the power of attorney. Therefore the evidence was tendered to prove a subsequent oral variation of the written instrument, rather than to assist in the construction of the instrument. I have found that a power of attorney by deed may be terminated or varied orally. Christos's evidence is therefore clearly admissible. The question is whether, on their proper construction, the words used by Christos in his conversation with his son constituted a revocation or limitation of his son's general authority under the instrument. 24 The words "I want to give you power of attorney" are curious, given that Christos executed the power of attorney some weeks earlier. However, in my opinion those words should not be construed as a statement of future intention to execute a power of attorney. Christos made his statement when he was about to leave for his holiday, and so it is unlikely that he intended to make another power of attorney before his departure. It is more likely, in my view, that the words "I want to give you power of attorney" were intended to be equivalent to "I have given you power of attorney" (or perhaps, more fully, "I have given you power of attorney because I want you to have authority"). 25 Paragraph 8 is the other part of the affidavit which, in my view, discloses an intention on the part of Christos inconsistent with any intention that the power of attorney be held by Mr Berryman's firm in escrow subject to further instructions from Christos. According to paragraph 8, his intention (at least in May 1994) was that his son would be able to use the power of attorney without needing to have recourse to Christos for further specific instructions. 26 Counsel for Christos asked me to infer that the occasion of the conversation deposed to in paragraph 8 was the only occasion upon which Christos informed his son of the existence of the power of attorney, prior to his departure overseas. That is not an inference I am prepared to make, in view of the limited evidence before me. However, whether or not Christos informed his son of the existence of the power of attorney on some other occasion, the statement to which he deposed in paragraph 8 was clearly enough an instruction to his son to use the power of attorney while Christos and his wife were overseas in the event that something should come up requiring the signature of Christos. 27 Counsel for Christos submitted that the statement operated as a variation of the written power of attorney, having the effect of confining the scope of the attorney's authority to the execution of any document that should require signature by Christos while he was overseas on the holiday then contemplated, and causing the power of attorney to come to an end automatically (that is, without any further steps being taken by Christos) when Christos and his wife returned to Australia later in 1994. 28 This issue has given me some difficulty. Christos' words were, as I have said, an instruction by father to son to use the power of attorney for signing documents that should require the father's signature while he was away. To use the language of Tadgell J, they were a direction to act, superimposed upon the mere authority to act conferred by the instrument. 29 It is true that nothing was expressly said to the son to require him to restrict the use of the power of attorney solely to such circumstances. Further, nothing was expressly said to the effect that the power of attorney would be spent by virtue of the return of Christos and his wife to Australia at the end of the holiday. Considered literally and in isolation from the surrounding circumstances, Christos's statement was consistent with an intention that the power of attorney would remain available to be used in a similar way during any future overseas holidays, and also with an intention that it would be available to be used on other occasions in accordance with its general terms, regardless of whether Christos was overseas. 30 But the surrounding circumstances are very significant. This was a father talking to his son, just before the father left on an overseas holiday. He directed his son to use the power of attorney, which he had recently executed, while he was away. The direction was cast across the mere authority expressed in the instrument, and it was a direction limited to the period of the overseas trip. In the circumstances, the direction implied, in my view, that the father's intention was for his son to use the power of attorney while he was away, but not to use it after he returned unless he gave particular authority. I find it implausible in the extreme that Christos would have intended to create a situation in which his son would have general authority in respect of all and any of the affairs of his father, after his father had returned to Australia and was competent to handle those affairs himself. It is consistent with this conclusion that the power of attorney was left with Mr Berryman's firm for safe keeping, rather than being delivered to Donald for general use. 31 It follows from these findings that the actual authority conferred by the power of attorney had been withdrawn by 1996, when Donald executed the loan agreement purportedly as attorney for his father. Christos did not give his son actual authority to execute the loan agreement, or to give security over his property, or to receive the proceeds of the loan, or to repay the loan, or to direct Dr Vickery to pay JJP, or to direct JJP to appropriate Dr Vickery's payment to the loan. The loan transaction 32 John Pacholski is an experienced finance executive who has held senior positions with Esso Australia Limited, Lend Lease Corporation Limited and Westpac Banking Corporation. He ceased employment with Westpac in about April 1998. He has had considerable experience in the provision of finance in large commercial transactions. He is the sole director and shareholder of JJP, which is the trustee of a Maintenance Trust established for the benefit of the children of his first marriage. 33 Mr Pacholski met Luke Pollard at a time prior to 1995, when they both worked for the Lend Lease group. At that time Mr Pacholski was known by the nickname "Killer". Mr Pollard left Lend Lease before Mr Pacholski, to establish his own business called Luke Pollard Enterprises Pty Ltd ("LPE"). Mr Pacholski and Mr Pollard had reasonably regular meetings afterwards, to discuss commercial and business related issues. In late 1995 Mr Pollard introduced Mr Pacholski to his business associate, Donald. Mr Pacholski only ever met with Donald in the company of Mr Pollard, and he estimates that they would have met on fewer than 12 occasions. 34 Early in March 1996 Mr Pollard telephoned Mr Pacholski to invite him to invest about $50,000 over a period of six months in a property transaction, with the prospect of a high rate of profit. Mr Pacholski indicated that the trust established by him as part of his divorce settlement might be able to make a loan if the transaction was secured. Mr Pollard and Mr Pacholski met on about 10 March 1996. Mr Pollard explained that the property was at Bull Street Newcastle, and was owned by Donald's parents. He said that the project was to take an option over the property, refurbish it and sell it quickly. 35 After further negotiations between Mr Pacholski and Mr Pollard, Mr Pacholski prepared a draft letter of offer of finance on behalf of JJP as trustee of the Maintenance Trust. The draft was dated 21 March 1996 and was directed to LPE. 36 At some time between 21 and 25 March 1996 Mr Pacholski had a conversation with Mr Pollard in which Mr Pollard said: "LPE isn't able to get a guarantee from Chris Nantsou as security for the loan. Can the Maintenance Trust provide the loan on the same terms to Chris Nantsou?" 37 Mr Pacholski agreed to that proposal. He altered the draft letter of offer by amending the date and addressing it to Christos rather than LPE, and making other consequential changes. The offer was for a loan of $50,000 for a term of six months, repayable with interest. 38 Documentation for the loan transaction was executed on about 25 March 1996. The documentation comprised a caveat on the title to the Bull Street property, a mortgage instrument and the letter of offer of finance signed on behalf of the borrower. In all three documents the borrower was described as "Chris Nantsou" rather than "Christos Nantsou" (the correct name appearing on the title). The caveat and mortgage forms were completed by hand, and the evidence is that the handwriting was Luke Pollard's. Donald signed each of the instruments as borrower/mortgagor, and in each case the following words appeared near his signature: "signed by Don Nantsou under power of attorney dated ….. for Chris Nantsou". The signatures were witnessed by Mr Pollard. The date of the power of attorney was left blank. 39 On 26 March 1996 JJP provided the first drawdown pursuant to the loan agreement, in the sum of $40,000, by bank cheque in favour of Don Nantsou Consultancy. By letter dated 10 September 1996, Donald requested drawdown of the final $10,000, to be deposited into the account of Don Nantsou Real Estate Pty Ltd. The letter claimed that the loan agreement would be concluded, as originally agreed, on 30 September 1996 with no extensions required. JJP provided the additional funds, as directed, on 11 September 1996. 40 JJP wrote to Christos at the address of Donald, on 16 September 1996, setting out the amount required to repay the loan on 30 September 1996 and asking that arrangements be made for payment. The loan was not repaid at that time, and Mr Pacholski on behalf of JJP corresponded with "Chris Nantsou" at Donald's address over the ensuing months. He met with Donald and Mr Pollard on 9 October 1996. Donald explained that the Bull Street property had not been sold, and said that he would arrange for $35,000 of the loan facility to be repaid, asking that the balance of the loan be extended for 90 days to 10 January 1997. Mr Pacholski agreed, and said that the sum of $35,000 was to be paid directly into JJP's bank account on the following day. 41 The sum of $35,000 was deposited into JJP's bank account of 11 October 1996. In fact the money was paid by Dr Vickery, in circumstances that I shall describe. Mr Pacholski was not aware that Dr Vickery made the deposit, and believed that the money had been deposited by Donald on behalf of Christos pursuant to the arrangements made at the meeting on 9 October. 42 On 24 December 1996 Mr Pacholski wrote again to Christos at Donald's address, requesting that the balance of the loan then due on 10 January 1997 be paid directly into JJP's bank account. Mr Pacholski then travelled overseas and returned on 20 January 1997. He found that the balance of the loan had not been repaid, and he then had several telephone conversations with Mr Pollard, who promised to follow up the matter with Donald. 43 Mr Pacholski met with Donald and Mr Pollard on 23 January 1997. Mr Pacholski said: "This loan is now more than 100 days overdue. I need the money now or I'm going to enforce the security." Donald said: "There's a guy in Newcastle that I have been doing some consultancy work for. He owes me a fair amount of money. When I get the money from him, I will repay you straight away." Later on the same day Mr Pacholski received a letter dated 23 January 1997 stating that the balance of the loan would be repaid on 29 January 1997. The letter was expressed to be from "Chris Nantsou" but it was not signed. 44 After several further conversations between Mr Pacholski and Mr Pollard, Mr Pollard phoned Mr Pacholski on 3 February 1997, and said: "Don doesn't want to delay your repayment until after the funds from his client in Newcastle are cleared, so he's arranging for his client to pay $42,400 which he owes Don into your account. Can you work out what we owe you and give us a cheque for the balance? Make the cheque out to LPN Investments for the balance." 45 On 4 February 1997 the sum of $42,400 was deposited into the bank account of JJP. JJP retained $27,686.80 for repayment of principal and interest, and paid the balance to LPN Investments Pty Ltd as directed by Mr Pollard. 46 The Bull Street property was sold and transferred by Christos on 24 April 1997 for the sum of $122,500. The memorandum of transfer appears to have been signed by Christos himself. 47 All dealings in respect of the loan transaction were conducted between Mr Pacholski on behalf of JJP, and Mr Pollard and Donald purportedly on behalf of the borrower. At no stage during the transaction did Mr Pacholski have any contact with Christos. Indeed, his evidence was that the first time he saw Christos was in court at the final hearing. 48 On about 23 May 1998, Mr Pacholski received a letter from Dr Vickery to JJP dated 15 May 1998. The letter enclosed documentation for the two deposits, which Dr Vickery described as "payment for my 25% share of a building project in Rushcutters Bay (Bayswater Road end) which has been documented by Mr Done Nantsou (the other 25% shareholder) with the residue of 50% share for your company JJP Custodians". The letter said that Dr Vickery had not received any documentation for his share or any receipt for the money, and asked that the situation be rectified. Dr Vickery wrote another letter on 16 May 1998, providing further information about the Rushcutters Bay project. The second letter was received by Mr Pacholski on 21 May 1998. He says this was the first time he became aware of the Rushcutters Bay project. 49 On 25 May 1998 Mr Pacholski wrote letters to Dr Vickery, and Donald and Mr Pollard, denying any knowledge of or involvement in the Rushcutters Bay transaction prior to receiving Dr Vickery's letters. Mr Pollard replied to JJP on 26 May 1998, on the letterhead of LPN Investment Capital Pty Ltd. Mr Pollard's letter said that Dr Vickery was a development partner with Donald for a development at Rushcutters Bay, contributing $43,000 of seed capital. It said that those funds were transferred to JJP "to save time", and the funds were subsequently reinstated to Dr Vickery "at our end". According to the letter, Dr Vickery then elected to apply the $43,000 and an additional $107,000 to take part in an "in option shortfall underwriting" in Carpenter Pacific Resources (this transaction is discussed below). That deal remained current but according to the letter, Dr Vickery was endeavouring to withdraw prematurely and there was a dispute between Dr Vickery and LPN Investment Capital over the matter. 50 Dr Vickery instituted proceedings against Luke Pollard Enterprises Pty Ltd in this Court, No 2356 of 1998. Dr Vickery's dealings with Donald 51 Dr Vickery is a psychiatrist practising near Newcastle. He also makes business and commercial investments. He has been involved with Donald in various business dealings since about 1995. Those business dealings include the Rushcutters Bay project and an investment in the securities of Carpenter Pacific Resources NL. 52 Dr Vickery became involved in the Rushcutters Bay project when Donald visited him in his surgery on about 10 October 1996. Donald said that he was doing a project in Rushcutters Bay with "Killer from Westpac", and he invited Dr Vickery to become involved for a 25% share, on the basis that Donald would have 25% and Killer would have 50%. Mr Nantsou explained that the project was a block of residential units to be developed on several properties overlooking the harbour at Rushcutters Bay. The properties were for sale by Westpac because the owners could not meet their loan repayments. Mr Nantsou also said that his partner Killer could not be directly involved because he was a top executive with Westpac and there would be a conflict of interest. He insisted that if Dr Vickery became involved, no contact be made with Killer. 53 The proposal was that Dr Vickery would put up $35,000 immediately to fund the acquisition of options over the properties to be acquired, on the basis that there might be some further money needed later. Mr Nantsou said that he would arrange for documentation of the transaction. He said that Dr Vickery's money would be returned as soon as Killer arranged a loan to cover the full acquisition and construction costs through his contacts at Westpac. 54 Dr Vickery agreed to participate and Mr Nantsou told him to deposit $35,000 into the account of JJP, which he specified, immediately. Dr Vickery deposited $35,000 by bank cheque into the account of JJP on 11 October 1996. This was the $35,000 referred to above, treated by JJP as part repayment of its loan to Christos. I note that at this time Mr Pacholski was pressing Donald and Mr Pollard for repayment of the loan, which was overdue. 55 Later in 1996 and for part of 1997 Donald and Dr Vickery were partners with another person in a wholesale vegetable business in the Newcastle area, and so Dr Vickery was regularly in contact with Donald. On one occasion he mentioned to Mr Nantsou that he had not received documentation for the Rushcutters Bay project. Mr Nantsou assured him that the transaction would go ahead but that Killer was working on the development of the Olympic site and was very busy. On another occasion Mr Nantsou mentioned the name "Pacholski". He identified Mr Pacholski as his partner, Killer. 56 According to Dr Vickery, Donald arranged for a meeting with Killer at a restaurant in Sydney late in 1996, but Killer did not attend the meeting because, according to Mr Nantsou, he was too busy with the Olympic site. 57 On about 4 February 1997 Donald visited Dr Vickery at his surgery and gave him a slip of paper headed "Newcastle Permanent" which said that $42,400 was needed on that day. The funds would be repaid at the end of February "by selling some shares". The slip of paper set out some costings for the project, showing estimated costs of $8.4 million or $9.24 million and estimated returns from sales of $11.5 million. It said that documentation would be prepared later. Dr Vickery deposited a bank cheque for $42,400 into JJP's account on 4 February 1997. Before he did so Donald told him that Killer would return his money in several weeks. The deposit of $42,400 was treated by JJP as repayment of the balance of the loan to Christos, in the manner described above. The sum of $27,686.80 was applied to discharge the loan and interest and the surplus was paid over to LPN Investments Pty Ltd. 58 Dr Vickery gave evidence that on 5 February 1997 he rang Westpac and located Mr Pacholski's section of the bank, and left the message for him to call. Dr Vickery said that about one hour later Donald rang him and asked whether Dr Vickery had tried to contact Mr Pacholski, reminding Dr Vickery that he had previously been told not to do so. 59 Over the ensuing months Dr Vickery spoke to Donald and reiterated his request for share documentation for the project. Mr Nantsou told him that there had been a delay with the paperwork but that the transaction would still happen. From early February 1997 onwards Dr Vickery had little to do with Donald, because he understood that Mr Nantsou had gone overseas on holidays. When Mr Nantsou return from holidays Dr Vickery had another conversation with him in which he asked again for his documentation and the return of his money, and Mr Nantsou told him that the transaction was still going through and that the documents were being prepared. 60 From the time of that conversation, which was apparently in the early part of 1997, there is a gap in the evidence until May 1998, when Dr Vickery wrote the two letters to JJP referred to above. Dr Vickery did not give an account of what had happened during that time, or explain in any satisfactory way why he took no action for recovery until May 1998. 61 Mr Pacholski denied being involved in any way with the Rushcutters Bay project, in his personal capacity or as a director of JJP or as an executive employee of Westpac. He agreed that the sums of $35,000 and $42,400 were deposited into the account of JJP, but insisted that he thought those amounts were deposited by Donald on behalf of his father pursuant to the arrangements between them. He denied ever making an arrangement with Dr Vickery, and said he had no recollection of ever receiving a message from Dr Vickery. 62 I see no reason to disbelieve the evidence of either Dr Vickery or Mr Pacholski on any of these matters. Their evidence is not inconsistent, and suggests that they were both the victims of misrepresentations made by Donald. 63 The second transaction involving Dr Vickery and Donald related to Carpenter Pacific Resources NL ("Carpenter"). Part of the evidence about that transaction was given by Dr Vickery in proceeding No 2356 of 1998, in which (as I have said) Dr Vickery sued Luke Pollard Enterprises Pty Ltd in respect of the transaction. 64 The transaction arose out of a conversation between Dr Vickery and Donald early in October 1996, in which Mr Nantsou told Dr Vickery that he should "get involved in" Carpenter. Dr Vickery contacted his stockbroker on about 23 October 1996 and then during the period up to June 1997 he bought and sold various options in Carpenter. On 12 May 1997 he had a conversation with Donald in which Mr Nantsou told him that his partner "cool hand Luke" (a reference to Mr Pollard) would be getting "unredeemed options" for $0.25 in June, and that Dr Vickery could have up to one million if he could pay for them immediately. Dr Vickery said: "I can buy about $100,000 worth and if you can add the $42,000 from the money you owe me then I can take 600,000 shares." According to the evidence of Dr Vickery, Mr Nantsou replied "Graham, I will put in the $43,000 and you can be sure you will get the shares". It is unnecessary, for the purposes of the present case, for me to trace the other components of the transaction, or the outcome of Dr Vickery's action to enforce it. Dr Vickery's loss 65 Counsel for Christos suggested to Dr Vickery in cross-examination that the sums of $42,000 and $43,000 referred to in the above conversation, the evidence of which was given in Dr Vickery's affidavit in proceeding No 2356 of 1998, were identical with the $42,400 paid by Dr Vickery into the account of JJP as the second instalment of his funding for the Rushcutters Bay project. If that were true, then it would appear that Dr Vickery had been repaid the $42,400 by Donald, and consequently that he had no claim for recovery in respect of that amount in the present proceeding. 66 Dr Vickery firmly rejected that suggestion, saying that the money referred to in his conversation with Mr Nantsou was money owed by Mr Nantsou in respect of some share transactions. He said the money he used for building projects was separate from the money he used for share projects. He produced a document headed "Minutes of discussion with Don, Julie and Graham on 12 May 1995". That document states that "Don" was to repay "GJV" $74,000 for BHP options, Mining Shares, "Nassar" and "Loan". 67 Counsel for Christos said I should reject Dr Vickery's evidence on this point in view of a number of factors: · the evidence in Dr Vickery's affidavit in the other proceeding fluctuated between the figure of $42,000 and the figure of $43,000, suggesting that the true figure may well have been $42,400; · the amount said to be owing in the minute produced by Dr Vickery was $74,000, and he gave no evidence of any discussion about repayment of the balance of that amount; · treating the arrangement with respect to the Carpenter options as one involving repayment of the $42,400 advanced in respect of the Rushcutters Bay project would explain why Dr Vickery did nothing to enforce recovery of his advances in the Rushcutters Bay project from early 1997 until May 1998; and · the proposition that negotiations for Mr Nantsou to repay $43,000 in May 1997 would relate to some figure other than the $42,400 advanced by Dr Vickery for the Rushcutters Bay project is such a coincidence as to test credulity. 68 It appears from the evidence that Dr Vickery and Donald were quite extensively involved with one another in investment transactions. The minutes of their discussion on 12 May 1995 provide a glimpse of the extent and complexity of their dealings with one another, even before the two transactions under consideration in the present case. The evidence before the Court in the present case is far less than a complete account of their business relationship. 69 Nevertheless, I am not persuaded that I should reject Dr Vickery's categorical evidence that the $43,000 or $42,000 referred to in his conversation with Donald concerning the Carpenter options was a debt arising out of share transactions between them and had nothing to do with the Rushcutters Bay project. Dr Vickery gave his oral evidence in a careful and straightforward fashion that gave me no cause to disbelieve him. The minute produced by Dr Vickery is some evidence that an independent debt existed. It is not implausible that the parties might have identified that component of the $74,000 debt referred to in the minute as the amount owing by Donald to Dr Vickery in May 1997. Weighing up the documentary evidence as best I can, and taking into account my observation of Dr Vickery in the witness box, I have decided to accept his evidence on this point. 70 Counsel for Christos also queried whether Dr Vickery could truly claim to have lost the $35,000 paid to JJP in the first of the two instalments. The evidence includes a copy of an undated letter from Donald to JJP's solicitors, received by them on 15 November 1999. In that letter Mr Nantsou alleges that the amount of $35,000 claimed by Dr Vickery was repaid in full some years earlier, to enable the settlement of some townhouses Dr Vickery was buying in Darby Street, Bar Beach. Dr Vickery agreed in cross-examination that he was involved in the purchase of some townhouses in Darby Street over a two year period from 1995 to 1997 or perhaps 1994 to 1996, and said that the project was managed by a person called Peter Durbin (or some similar name that he could not quite recollect). 71 Christos' solicitors served a notice to produce on Dr Vickery's solicitors on 25 July 2002, requiring production of all correspondence and financial records relating to Dr Vickery's purchases of townhouses in Darby Street. Dr Vickery's solicitors responded on the next day, saying that production of those documents would put Dr Vickery to considerable inconvenience, and questioning the relevance of the documents to the present proceeding. There was no response to that letter before the hearing. Counsel for Christos called upon the notice to produce during his cross-examination of Dr Vickery, and nothing was produced, but counsel for Dr Vickery referred to his instructing solicitor's letter. Counsel for Christos then suggested to Dr Vickery that the financial records for the townhouse project in the possession of Mr Durbin might record a debt owing to Donald of $35,000. Dr Vickery denied the possibility that such a debt might exist. However, he agreed that he had made no attempt to retrieve documents from Mr Durbin in answer to the notice to produce, explaining that he believed the notice to produce was limited to documents in his own possession. 72 On this foundation counsel for Christos submitted that, although the financial records for the townhouse project were in the possession of Mr Durbin, they were within Dr Vickery's control. Since Dr Vickery had not produced any of the financial records in response to the notice to produce, counsel submitted that the Court should infer that those financial records would not assist Dr Vickery's case, and consequently Donald's claim that he had repaid the $35,000 should be accepted. 73 I disagree with this submission. In the first place, it appears from Dr Vickery's oral evidence and his solicitor's response to the notice to produce that there was, at the very least, some uncertainty as to whether the notice to produce required Dr Vickery to recover documents from Mr Durbin. Indeed, it is not clear to me on the skimpy evidence before me that the financial records in question were within Dr Vickery's control. Secondly, although Donald claimed in his letter to have repaid the $35,000, judgment was subsequently entered against him. It is not clear to me whether damages taking into account the sum of $35,000 have been assessed against Donald, but even if there has been no such assessment, one would have expected Mr Nantsou to have filed some evidence in the proceedings if he seriously contended that the $35,000 had been repaid by him. He has not done so. 74 My conclusion is that Dr Vickery has proven, on the balance of probabilities, that he has lost the whole of the two amounts paid by him into JJP's account, that is to say the sums of $35,000 and $42,400. Christos' state of knowledge regarding the loan transaction and Dr Vickery's payments to JJP 75 Christos gave evidence, which I accept, that: · to his knowledge and belief his son never had occasion to exercise the authority conferred on him by the power of attorney; · he did not direct his son to act on his behalf in respect of the loan transaction; · he never had any contact with JJP, and was not aware that any such company existed until he received a letter dated 30 August 1999 from Dr Vickery's solicitors making the demand which led to his joinder in the present proceeding; · he knew nothing about the transactions or dealings between Dr Vickery and his son until he was served with the pleadings in the present proceeding; · he did not know about, nor did he request Dr Vickery to pay, the sums of $35,000 and $42,400 paid by Dr Vickery to JJP; and · no repairs of any nature were made to the Bull Street property after it was damaged by an earthquake in December 1989, until the time Christos sold it in 1997, and the property was vacant for a period of approximately two years prior to completion of the sale. 76 One of the consequences flowing from these findings is that if (contrary to my findings) there had been a loan agreement binding Christos, it could not have been said that JJP's appropriation of Dr Vickery's payments to the discharge of the loan would have been effective payment of the loan. If, unbeknown to the borrower, a third party makes a payment to the lender and the lender treats the payment as discharging or reducing the loan, the lender can still sue the borrower on the loan agreement despite that payment, in the absence of the borrower's assent to the payment: City Bank of Sydney v McLaughlin (1989) 9 CLR 615, 633; Lucas v Wilkinson (1856) 1 H & N 420 [156 ER 1265]; Re Rowe [1984] 2 KB 483; Smith v Cox [1940] 2 KB 558; Guardian Ocean Cargoes Ltd v Banco do Brazil [1991] 2 Lloyd's R 68, 87-8; cf Hirachand Punamchand v Temple [1911] 2 KB 330; see Mason & Carter at paragraph [846]. Availability of the power of attorney at the time of execution of the loan agreement 77 A question was raised at the hearing as to whether Mr Pacholski of JJP saw the original power of attorney or a photocopy of it at the time of execution of the loan agreement, and whether he made and retained in a photocopy of the power of attorney. I should note at the outset that it has not been suggested, and the evidence does not show, that the copy of the power of attorney was certified in accordance with the provisions of s 163A of the Conveyancing Act. 78 Counsel for Christos submitted that at the time of execution of the loan agreement Mr Pacholski saw neither the original nor a photocopy, and that any photocopy he may have obtained was obtained at a much later time. 79 The evidence of Mr Berryman was that as far as he was aware, the original power of attorney remained in safe keeping in his office from the time of its execution until the time of hearing. The practice in his firm was that if the document was removed from document storage a note would be made of that fact on the firm's computer. A further note would be made when the document was returned into safe custody. A computer printout in respect of the power of attorney showed that there were no dealings with that document during the relevant period. This evidence satisfies me, on the balance of probabilities, that the original power of attorney was not removed from Mr Berryman's office at any relevant time after it was executed. 80 Mr Berryman also gave evidence that at no stage had he received instructions from Christos to show the power of attorney to Dr Vickery or JJP or to make a certified copy of it. He gave oral evidence that to the best of his recollection, he was not asked to provide a copy of the instrument to Christos or Donald. However, he conceded in cross-examination that it was possible that a photocopy of the instrument may have been made and released by someone in his office without his knowledge. For reasons I shall explain, I have reached the view that JJP had a photocopy of the power of attorney at the time of execution of the loan agreement. I infer that a photocopy must have been made at some stage prior to the execution of the loan agreement without Mr Berryman being aware that this had happened. That inference is strictly consistent with Mr Berryman's evidence, although he said he believed such an event was very unlikely. 81 The basis for my finding that JJP had a photocopy of the power of attorney at the time of execution of the loan agreement is that I accept the evidence of Mr Pacholski on that point. Mr Pacholski gave evidence that at about the time of execution of the mortgage, caveat and loan agreement by Donald, he sighted the power of attorney dated 7 April 1994. He said in his affidavit that the document appeared to him to be an original, and that he took a photocopy of it for his records. 82 The copy of the power of attorney exhibited to his affidavit was a copy of only the front of the document. However it is probable, in my view, that the photocopy of the back of the document was omitted from the exhibit through clerical error. On 15 September 2000 JJP's solicitors sent to Dr Vickery's solicitors a bundle of documents which included a photocopy of the front and back of the power of attorney. Mr Pacholski gave evidence that the bundle of documents attached to the solicitors' letter was the bundle produced by him to the solicitors for the purpose of discovery. I infer that the documents enclosed with the letter of 15 September 2000 were JJP's discovery documents, and that before that time, Dr Pacholski had in his possession a photocopy of the front and back pages of the power of attorney. 83 During cross-examination Mr Pacholski was shown the original power of attorney and was unable to identify it as the document shown to him at the time of execution of the loan agreement. By the end of his cross-examination his evidence was that the document supplied at the time of execution of the loan agreement was a two-page photocopy rather than the original single double-sided instrument. But he was adamant that the copy power of attorney was produced to him at the time of execution and that he made a photocopy of it at that time. 84 I accept Mr Pacholski's evidence on this matter. There was nothing in his demeanour in the witness box to cause me to reject his evidence. It is true that his answers were somewhat defensive but in the circumstances, I did not regard that defensiveness as an indication of untruthfulness, evasiveness or prevarication. Much of the cross-examination was designed to raise questions about Mr Pacholski's competence. For example, he was challenged as to whether, in his position as a senior finance executive, he would sign documents without reading any part of them including the attestation provisions, and he was challenged as to whether he reviewed the security documentation in January 1997 when the borrower was in default. Rather than making direct answers to the questions put to him, he frequently answered by justifying his position, pointing out (for example) that he relied on lawyers for various tasks. Given his seniority and his sense that his reputation was stake, I found his tendency to provide justifications to be understandable, rather than evasive. Overall, I found him to be a satisfactory witness whose evidence should be believed. 85 Counsel submitted that I should reject Mr Pacholski's evidence that he firmly recollected receiving a copy of the power of attorney at the time of execution, on several grounds. One was that Mr Pacholski could not remember details about the document such as its colour or size. In my opinion his inability to remember these details did not undermine his evidence of a clear recollection of seeing the document. Counsel also drew attention to the fact that the attestation provisions of the documents signed by Donald referred to his father as "Chris" rather than "Christos". In my view that discrepancy may be explicable on the simple ground that Mr Pollard new Christos as "Chris" rather than "Christos", and does not signify that a copy of the document was unavailable at the time of execution. Similarly, the fact that the attestation provisions did not include the date of the power of attorney is not significant, in my view. The documents were prepared by Mr Pollard, who may simply have omitted the date on the basis that such details could be completed later. Did the loan agreement bind Dr Vickery as principal? 86 Counsel for Christos submitted that if an agent enters into a contract with the actual authority of his or her principal, the principal is bound and it is unnecessary to inquire into the agent's implied or apparent (ostensible) authority or to consider whether the other contracting party investigated the agent's authority: Perry v Holl (1860) 2 De GF & J 38 [45 ER 536], at 48 [ER 540], per Lord Campbell LC; Hambro v Burnand [1904] 2 KB 10, at 19-20 per Collins MR, 23 per Romer LJ, 25 per Mathew LJ; see also Bowstead and Reynolds, at 405. While these propositions appear to be correct, they are irrelevant. This is because I have found that the power of attorney had been withdrawn before Donald executed the loan agreement in 1996, and Christos was unaware of anything about the loan agreement. Therefore Donald did not have the actual authority of his father to execute the agreement or the accompanying security documents. Since he remained ignorant of the loan transaction and Dr Vickery's dealings with his son until after the loan was repaid, it cannot be said that he adopted and ratified the loan agreement after it was made. 87 Christos may nevertheless have been bound by the loan agreement if his son had his ostensible authority to enter into it. Ostensible authority arises when a principal represents or holds out another person as his agent having authority to enter into the contract in question, or having usual authority to enter into transactions of the same kind as the contract in question. Where the principal has thus clothed the agent with apparent authority, he is bound by a contract entered into by the agent with a third party within the scope of that apparent authority, even if the agent never had any actual authority to make the contract, or his actual authority had been withdrawn, provided that the third party had no notice of the lack of actual authority: see, generally, Bowstead and Reynolds at 385ff. 88 The general law of agency is supplemented, in the case of a power of attorney, by Part 16 of the Conveyancing Act 1919 (NSW). Three sections warrant specific mention, namely ss 163, 163A and 162. 89 Section 163 provides for registration of a power of attorney, and states that no deed executed by the attorney under the power is of any force or validity unless the instrument creating the power has been registered. On the view I take on the question of ostensible authority, it is unnecessary for me to decide upon the precise effect of s 163 on the facts of this case. The matter was not fully argued. However, it appears that the section does not apply to a simple contract such as the loan agreement, and arguably did not apply to the mortgage instrument in the absence of registration. 90 Section 163A deals with proof of powers of attorney, stating that a copy of a power of attorney certified in the manner provided for in the section is evidence against the principal of the execution and contents of the instrument, and is evidence against any other person of the contents of the instrument. The section is not directly applicable here, because the copy of the power of attorney provided to JJP was not a certified copy, but Dr Vickery's counsel calls the section in support of an argument that in the absence of the original instrument or a certified copy, JJP was put on inquiry as to the validity and effect of the power. 91 Section 162 is of particular importance in this case. It is as follows (to the extent relevant): "162 Termination etc - protection of strangers (1) Where: (a) an attorney under a power of attorney does an act within the scope of the power, professing to act on behalf of another, (b) at the time of the act of the attorney or afterwards, a third person: (i) acts as a purchaser or incurs an obligation or otherwise acts to his or her detriment in a transaction (with the attorney or with any other person) which depends for its validity or effect on the power not having terminated … at the time of the act of the attorney, … (c) at the time of the act of the third person he or she does not have notice that, at the time of the act of the attorney, the power had terminated, … the third person … shall be entitled, as against the principal and the attorney and any other person, to rely on the power notwithstanding any termination of the power before the time of the act of the attorney … in the same manner and to the same extent as if the power had not terminated before the time of the act of the attorney …." 92 In the present case, subparagraph (a) is satisfied with respect to entry into the loan agreement, because Donald entered into it within the scope of the broad words of the power, professing to do so on behalf of his father. At the time when Donald did so, JJP incurred an obligation and otherwise acted to its detriment in a transaction (the loan transaction), and that transaction depended for its validity or effect on the power not having been terminated, since it was purportedly a loan agreement between JJP as lender and Christos as borrower, secured over Christos's property. Therefore subparagraph (b) is satisfied. The question is whether, for the purposes of subparagraph (c), JJP had notice at the time of entry into the loan agreement that Donald's power had been terminated, by virtue of the conversation between father and son some years earlier. 93 Subparagraph 162 (1) (c) uses the word "notice" rather than the word "knowledge". It appears that the third party's claim to uphold a contract made by an agent under a power of attorney that has been terminated will be defeated not only where the third party has actual knowledge of revocation of the power, but also where the circumstances surrounding the use of the power create reasonable grounds for suspicion and therefore reasonable grounds to make further inquiries which, if made by the third party, would have led him to discover the revocation: Collier and Lindsay, at 194. "Notice" in this sense appears to be no different under the section than under the general law of ostensible authority: see Bowstead and Reynolds, at 405-408. 94 Thus, in Mutual Provident Land Investing and Building Society Limited v Macmillan (1889) 14 App Cas 596, Mrs Macmillan executed a power of attorney appointing Mr White to be her attorney and conferring broad authority on him. Mr White executed a conveyance of land belonging to Mrs Macmillan, in favour of Mr Trickett. He covenanted to produce the power of attorney and made a statutory declaration that he had not received any notice of its revocation. However, Mrs Macmillan had married before the execution of the conveyance, and upon her marriage she had ceased to be competent to convey the property, because her interest had passed to her husband under the law of that time. She also gave evidence that she expressly revoked the power of attorney. 95 The statutory law of New South Wales at the time provided that a declaration made by the attorney that he had not received any notice of the revocation of the power would be conclusive proof of non-revocation in favour of a person who accepted a conveyance executed under power, if that person acted bona fide and for valuable consideration and "without notice to himself" of any such revocation. 96 One of the questions put to the jury was whether Mr Trickett accepted the conveyance bona fide and for valuable consideration. The jury answered "We believe Mr Trickett from his conversations with Mr Manning, and from what he knew of Mr White, should have made inquiries as to the validity of the power of attorney before purchasing." The evidence was that Mr Trickett had been informed by a Mr Manning that he did not believe Mr White and would not have taken his declaration. There was contradictory evidence as to whether Mr Manning had his conversation with Mr Trickett before or after completion of the conveyance. The Privy Council held that if the jury believed the evidence that the conversation took place before the conveyance, they were entitled to reach the verdict that they reached. 97 Although the wording of the New South Wales statute has changed over the ensuing years, it is still critically important to determine whether the third party had notice that the power of attorney had been revoked before entering into the transaction with the agent. Therefore Macmillan's case remains authority for the proposition that if in the circumstances the person dealing with the agent had reasonable grounds for suspicion which ought to have led him to make inquiries that would have led to discovery of the revocation, the third party cannot use the section to hold the principal to the contract; nor, one would add, would the principal be bound by his agent's ostensible authority at general law. 98 In the present case I have found that Mr Pacholski was given a photocopy of both sides of the power of attorney before the loan agreement was entered into, and he made a copy of that photocopy for JJP's records. But he did not inspect the original power of attorney or require a certified copy which would have given JJP the protection afforded by s 163A. Mr Pacholski did not search the register to satisfy himself that no instrument of revocation of the power of attorney had been registered under s 163 (3). By the time of the loan transaction, the power of attorney was nearly two years old. The loan transaction was proposed to Mr Pacholski for a project involving the development of a property known by him to be owned by Christos. It was a project that promised JJP a very high return over a short period of time. It would have been a simple matter for him to confirm with Christos that the power of attorney was still on foot and that his son had his authority to borrow on his behalf and to give security over the property. 99 Mr Pacholski was told to alter the loan documents, which he had prepared in favour of LPE, on the basis that LPE was not able to get a guarantee from Christos as security for the loan. He was asked to provide the loan to Christos. It is not necessarily irrational for a borrower to prefer a direct loan to an arrangement in which he guarantees the obligations of someone else. At least with a direct loan, the borrower should know the level of liability at all times and be able to anticipate the time and amount of payment. That may be harder to do when the liability is a guarantee liability for someone else's debt. Nevertheless, in this case there was an oddity in the arrangements. The original proposal was that the borrower be another commercial entity (LPE) guaranteed by Christos, and the change made Christos the principal borrower. On the face of it, the change meant an increase in liability for Christos warranting inquiry, even though a rational explanation might (from Mr Pacholski's point of view) have emerged upon inquiry. 100 There was nothing in the present case equivalent to the specific warning received by Mr Trickett as to the trustworthiness of Mr White in Macmillan's case. However, there is an accumulation of circumstances (mentioned above) which, in my opinion, created reasonable grounds for suspicion and therefore a duty of inquiry on the part of JJP as to whether the power of attorney had been revoked. 101 Instead of making an inquiry, JJP took a risk. Some remarks by Romer LJ in Hambro v Burnand are apposite (although in that case it was found that the agent had actual authority to act on the principal's behalf). His Lordship said (at 23): "By not inquiring for the written authority, they no doubt ran a certain risk. What was that risk? The agent represents that he has authority by reason of the fact that he signs the policy in the names of his co-insurers. If the plaintiffs do not ask to see his authority, upon what are they relying? They rely - and that is the only risk which they run - upon his representation that he has authority to enter into the contract. How can it be argued that the principals are not liable on the contract when it turns out that, to the extent to which the plaintiffs trusted the agent, they were justified in trusting him, and that, to the extent to which he made a representation of authority, he was justified in making such a representation?"

Conversely, one would say, how it can be argued that the principal is liable on the loan agreement when it turns out that, to the extent to which the lender trusted the agent, it was not justified in trusting him? 102 My conclusion, therefore, is that Christos was not bound to JJP by the loan agreement. Donald did not have his father's actual authority to enter into the transaction, and JJP could not rely on s 162 or the general law of ostensible authority because, being put on inquiry, it had notice of the revocation of Donald's authority. This conclusion also means that Donald's subsequent conduct in receiving the loan moneys, procuring payments by Dr Vickery to JJP, and purporting to authorise JJP to apply those payments to the loan, was conduct not supported by actual or ostensible authority and therefore not binding upon Christos. Summary of pertinent facts and claims 103 This is a dispute between two innocent parties about who should bear the loss caused by the wrongdoing of a third party. Both counsel referred in submissions to Donald's conduct as fraudulent. I shall adopt that label, because the facts narrated above strongly indicate fraud, although it is not my intention to make any finding that the ingredients of a criminal offence or of a civil cause of action for fraud have been established against him. The question therefore is, who as between Dr Vickery and Christos must bear the loss caused by Donald's fraud? 104 Christos signed a general power of attorney in favour of his son, Donald, in 1994, and directed him to use it while his parents were on holiday, and knew nothing of any subsequent events. His son purported to bind him to the loan transaction with JJP, but by that time the power of attorney had been terminated. The father received no benefit whatsoever from the loan transaction, as all moneys lent under it were paid to the son or entities associated with him, in fraud of the father. Dr Vickery made the two payments to JJP in the belief, induced by fraudulent misrepresentations by Donald, that the payments were for the purposes of the Rushcutters Bay project. Mr Pacholski applied those payments to the discharge of the loan in the belief, induced by fraudulent misrepresentations by Donald, that the moneys paid into JJP's account were loan repayments. In fact there was no valid loan because Donald lacked his father's authority to enter into the agreement, and consequently Christos was not indebted to JJP, and therefore the application of Dr Vickery's payments to the loan benefited Donald but did not benefit his father. 105 Dr Vickery claims to be entitled to recover $62,686.80 from Christos. That is the part of his payments of $35,000 and $42,400 applied by JJP to repay the loan which, according to the loan agreement, had been made to Christos. As I have said, Dr Vickery puts his case in terms of money had and received, money paid and unjust enrichment. I shall deal with each ground. 106 Before I do so, however, I shall deal with a submission by counsel for Christos, who contends that the entry of various judgments has prevented Dr Vickery from pursuing his claims against Christos. Significance of the consent judgment in favour of JJP 107 In his Amended Defence Christos says: "18. In further answer to the whole of the amended statement of claim, the third defendant states that the plaintiff's claim is barred by reason of an issue estoppel or estoppel in pais or election arising out of: (a) Terms of settlement and judgment in proceedings No 2356 of 1998 between the plaintiff and Luke Pollard Enterprises Pty Ltd in the Equity Division of this honourable Court. (b) Terms of the settlement and judgment in these proceedings entered between the plaintiff and the first defendant. (c) Default judgment against the second defendant in these proceedings." 108 In my opinion this defence is unsuccessful. As far as paragraph 18(a) is concerned, it has not been shown that the subject matter of proceeding No 2356 of 1998 is the same as the subject matter of the present proceeding, and therefore it has not been established that the judgment in favour of Dr Vickery and the judgment in the 1998 proceeding would be "two statements exhibiting an essential contradiction": see Spencer Bower, Turner and Handley on the Doctrine of Res Judicata (3rd ed by K R Handley, 1996), p 86. 109 As to paragraph 18(b), counsel for Christos submits that by allowing judgment to be entered in favour of JJP, Dr Vickery has permitted a "judicial pronouncement" to be made which is inconsistent with the case advanced against his client. He submits that Dr Vickery cannot approbate and reprobate, citing James Hardie & Co Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53 and VACC Insurance Ltd v BP Australia Ltd (1999) 47 NSWLR 716. 110 In my opinion this submission fails because a judgment in favour of Dr Vickery on any of the grounds advanced by him at the hearing would not be inconsistent with the judicial pronouncement constituted by judgment in favour of JJP. As I shall explain, Dr Vickery's claims against Christos for money had and received, money paid and on the basis of unjust enrichment are not presented as claims through JJP or dependent on showing that JJP is liable to Dr Vickery. The causes of action asserted by Dr Vickery against Christos are separate causes of action. 111 If Dr Vickery were to succeed, it is possible that Christos may have been disadvantaged by the entry of judgment in favour of JJP, in a manner analogous to the disadvantage that can arise to one concurrent tortfeasor if the tort victim and another concurrent tortfeasor agree to a consent judgment disposing of the tort victim's claim against that other concurrent tortfeasor. The disadvantage is that this process may remove the first tortfeasor's claim for contribution or indemnity against the second tortfeasor. This was the problem considered by the High Court in Seltsam's case. But that disadvantage, if it has occurred, is not a ground for dismissing the separate cause of action asserted by Dr Vickery against Christos. 112 No different consideration arises with respect to default judgment against Donald referred to in paragraph 18(c). 113 As a general proposition, a judgment against an agent operates as a merger of the cause of action against the principal: Bowstead and Reynolds, article 84 (pp 445-460). In oral submissions counsel for Christos submitted that by reason of the default judgment against Donald, there had been a merger of Dr Vickery's causes of action against Christos. He pointed out that when the default judgment was entered, it was judgment on all causes of action then pleaded. Dr Vickery might have amended the statement of claim before the default judgment by separating the causes of action pleaded against Donald and against Christos, but he did not do so. In my opinion this submission is no more successful than the written submissions made on behalf of Christos. As presented by Dr Vickery, his claims are conceptually separate claims, independent of the claims against Donald on which default judgment has been entered. Common money counts 114 In his Amended Statement of Claim, Dr Vickery seeks recovery of money on several common money counts, namely money had and received for the use of the plaintiff, money paid for a consideration which has wholly failed, money paid under a mistake of fact, and money paid. The pleading suffers, I think, from its history. The claim against Christos was added after commencement of the proceeding, and the pleading does not make completely clear the precise basis of recovery against him as opposed to the other defendants. 115 Only two of these four common money counts are asserted against Christos, namely the claims based on money had and received and money paid. The position taken in the pleading was not departed from by counsel for Dr Vickery during the hearing, except in one respect. In his Amended Statement of Claim Dr Vickery seeks to recover the whole amount paid by him to JJP, namely $77,400. At the hearing, however, counsel for Dr Vickery acknowledged that the claim against Christos was limited to the amount applied by JJP to repayment of the loan, namely $62,686.80. 116 The claims to recover money had and received, and money paid, invoke Part 15 rule 12A of the Supreme Court Rules, which permits what were the old common money counts to be pleaded in an abbreviated form in a statement of liquidated claim. The common money counts were developed in England up to the 19th century through the action in assumpsit (indebitatus assumpsit). Essentially the common money counts were forms of action in assumpsit, used as pleading devices to permit the plaintiff to make claims in general terms, a facility preserved in Part 15. 117 As pointed out by Mason and Carter (Mason, K and Carter, J W, Restitution Law in Australia (1995), p 13), four major claims arose out of the forms of action in assumpsit, namely those for: money paid; money had and received; quantum meruit; and quantum valebat. In the 19th and early 20th centuries these forms of action were regarded as based on an implied promise or request or "quasi-contract", to the extent that they were not based on a true contract (the concept of simple contract having been developed and become widely understood by that time). Textbooks on restitution trace the demise of the implied contract theory in English and Australian law: see, for example, Mason and Carter pp 17-28. In Australia, the implied contract theory was finally rejected as an explanation for quasi-contract in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221. The common money counts remained, but they had been liberated from the artificial constraints surrounding the fictional implied promise to pay. Money had and received 118 Paragraph 15 of the Amended Statement of Claim makes a claim against each of the three defendants for "money payable by the first and/or second and/or third defendants to the plaintiff as money had and received by the first and/or second and/or third defendants to the use of the plaintiff". The particulars of this claim refer to Dr Vickery's payment of the two sums "to the first and/or second defendant" by depositing a bank cheque into JJP's bank account. The pleading asserts that Dr Vickery was at the time of those payments unaware of the power of attorney and the loan transaction, but that JJP applied the first sum towards the loan facility debt and the second sum towards the loan facility debt and for other purposes. 119 The nature and scope of the action for money had and received was recently considered by the High Court of Australia in Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 185 ALR 335. In that case the respondent, who was a tobacco wholesaler, paid a tobacco licence fee which it recouped from the appellants (tobacco retailers) by charging them an identified amount in respect of the licence fee. The tobacco licence fee legislation was held to be unconstitutional and the respondent was entitled to be reimbursed the fees it had paid to the licensing authority. The appellants brought an action to recover from the respondent that part of the purchase price for tobacco which had been allocated to the unconstitutional licence fee. The High Court held (Kirby J dissenting) that the appellants were entitled to recover for money had and received by the respondents to their use, by reason of total failure of consideration. The fact that the appellants had recouped their payment of the unconstitutional license from their customers did not prevent them from recovering upon the claim for money had and received. 120 Rothmans is not directly relevant to the present circumstances. It has not been contended in the present case that Dr Vickery's claim against Christos is based upon a total failure of consideration. However, Rothmans is generally relevant because Gummow J explored the nature and basis of the claim to recover money had and received, exhaustively analysing the seminal case of Moses v Macferlan (1760) 2 Burr 1005 [97 ER 676]. 121 Gummow J criticised the concept of unjust enrichment as a general source of restitutionary obligations, and urged "caution in judicial acceptance of any all-embracing theory of restitutionary rights and remedies founded upon the notion of 'unjust enrichment'" (at 355). In his Honour's view, the various obligations to make restitution arise in Australian law out of conduct in a relationship or dealing, where the focus of legal attention is on the unconscionability of conduct rather than on the enrichment and its unjust nature in any more general sense. He saw unjust enrichment as a concept (admittedly, a unifying concept) rather than a definitive legal principle. He regarded Lord Mansfield in Moses v Macferlan as using equity (rather than any Roman law idea of natural justice) as the foundation for his decision, and agreed with Sutherland J of the United States Supreme Court (Myers v Hurley Motor Company 273 US 18 (1927) at 24) that the action for money had and received, "though brought at law, is in its nature a substitute for a suit in equity; and is to be determined by the application of equitable principles". 122 Lord Mansfield gave some specific instances in which the action for money had and received lay (2 Burr at 1012 [97 ER 681]): "… for money paid by mistake; or upon a consideration which happens to fail; or for money got through imposition, (express, or implied;) or extortion; or oppression; or an undue advantage taken of the plaintiff's situation, contrary to laws made for the protection of persons under those circumstances." 123 Gummow J pointed out (at 362) that the specific examples given by Lord Mansfield are not exhaustive of the scope of the action, which is broadly based on notions derived from equity which have been worked into and have become part of the fabric of the common law (at 363). It seems to follow that equity may continue to be the spur for further developments of the scope and content of the action for money had and received. 124 Even so, there are some limitations to the scope of the action for money had and received, imposed by history, that not even the generative force of equity can overcome. Perhaps the most obvious limitation, and the one relevant here, is that the action lies, in the words of Part 15 rule 12A (1) (f), to recover "money had and received by the defendant for the use of the plaintiff" [emphasis supplied]. That is, the action is available only where money has been received by the defendant, in circumstances where it is appropriate to impose an obligation on the defendant in favour of the plaintiff. Lord Mansfield's judgment itself confirms that the action is confined to the case where the defendant has received money from the plaintiff: see, for example, 2 Burr at 1010 [97 ER at 679], where his Lordship spoke of the pleading advantage that the plaintiff need not state the special circumstances from which he concludes that, ex equo and bono, the money received by the defendant ought to be deemed as belonging to him. 125 The idea that it is of the essence of the action for money had and received that the proper defendant is the person who receives the payment is articulated, again and again, in modern cases: for example, Rothmans at 339 per Gleeson CJ, Gaudron and Hayne JJ; Porter v Latec Finance (Qld) Pty Ltd (1964) 111 CLR 177,184-5,190, 197, 204. This is not surprising. The action for money had and received developed out of the action of indebitatus assumpsit. Brennan J pointed out in Pavey & Matthews Pty Ltd v Paul (1987) 69 ALR 577, 586, that indebitatus assumpsit was an action founded on a debt rather than any breach of contract; and although its particular manifestation in the action for money had and received appears to have developed out of considerations of equity, the cause of action has at all times remained an action in debt. The debt arises because the person who receives a payment from the plaintiff is held to be obliged, ex equo et bono, to hold the payment to the use of the plaintiff. There may be cases where A may recover from B because B received a payment from A for the use or benefit of a third party rather than for the use of A (Portman Building Society v Hamlyn Taylor Neck [1998] 4 All ER 202, 206-7), but I have been referred to no case where an action for money had and received has been made out by A against the third party, when B receives a payment from A for the use or benefit of that third party. 126 In the present case Dr Vickery made the payments to JJP, acting under a mistake induced by Donald. JJP, acting under another separate mistake induced by Donald, appropriated the money to a debt owed to it by Donald, which it wrongly believed to be a debt owed by Christos. Dr Vickery's payments of money were at no stage received by Christos. For that simple reason the action for money had and received is not available. Money paid 127 One of the alternative pleadings in paragraph 46 of the Amended Statement of Claim is that the plaintiff paid the two sums of money to JJP at the request of Donald, for and on behalf of Christos. The particulars of this pleading refer to Donald's false representations to Dr Vickery about the Rushcutters Bay project and the investment contract between them. It is said that Christos thereby became liable to repay the two sums to Dr Vickery. 128 The common money count or "indebitatus" count for money paid had by the 19th century become an action for "money paid by the plaintiff to the use of the defendant": see H Bullen and S M Leake, Precedents of Pleadings (3rd ed, 1868), p 35; C H S Fifoot, History and Sources of the Common Law (1949), p 369. The count averred that the defendant was indebted to the plaintiff, pleading the payment of money by the plaintiff to and for the use of the defendant, a request by the defendant that the money be so paid, and breach of a promise by the defendant to repay the plaintiff upon the plaintiff's request for payment. As Mason and Carter say (at 15), the principal use of the count for money paid was where B, acting at the request of A, discharged a debt owing by A to C: Hutchinson v Sydney (1854) 10 Ex 438 [156 ER 508]. B could bring an action for money paid to recover from A the payment made by B to C, alleging that the money paid to C was paid for the use of A. 129 Obviously an action for money paid would be available where A expressly requested B to pay C, and where such a request was implied from the circumstances. But an action for money paid was also available in non-contractual circumstances. According to Mason and Carter (at 15), in this category "the remedy lay if there was what, in modern terms, was compulsion of law on necessitous intervention"(citing Exall v Partridge (1799) 8 TR 308 at 310 [101 ER 1405 at 1406]; Pownal v Ferrand (1827) 6 B & C 439 [108 ER 513]). 130 In the present case Dr Vickery paid JJP at the request of Donald. This may have given him a cause of action for money paid against Donald. But Donald's request was made as part of his fraudulent scheme and without any authority from Christos under the power of attorney or otherwise. The facts do not support the allegation in the pleading that the payment was made for and on behalf of Christos, so that he could be regarded as the person making the request. Consequently the facts do not give Dr Vickery action for money paid against Christos. Unjust enrichment 131 The Amended Statement of Claim contains the following: " Unjust Enrichment and Recoupment 48. The plaintiff has made payments of the first sum and the second sum to JJP Custodians, at the request of Donald or, in the alternative, at the request of Christos, in circumstances where Donald was acting as the servant or agent of Christos. 49. The plaintiff made payments of the first sum and the second sum to JJP Custodians, on behalf of Donald or, in the alternative, on behalf of Christos, or in the alternative on behalf of Donald and JJP Custodians in respect to the Joint Venture. 50. In the premises, the plaintiff did not obtain any benefit by the payment of the first sum or the second sum to JJP Custodians. 51. In the premises, Donald and Christos and JJP Custodians have obtained a benefit by the payment of the first and second sum, and Donald and Christos and JJP Custodians have been unjustly enriched at the expense of the plaintiff. 52. In the premises, Christos holds 38 Bull Street (DP 533495, Lot 102) on trust for the plaintiff to the limit of the value of the first and second sum. 53. In the premises, Donald and Christos and JJP Custodians became and are liable to repay the first and second sum to the plaintiff." 132 The relief claimed by the plaintiff against Christos included return of $74,400 paid by Dr Vickery to JJP (reduced at the hearing, as I have said, to that part of the money applied to re-payment of the loan to Christos) together with interest. The following additional relief, apparently referable to the claim based upon unjust enrichment, was also claimed: "(iii) A declaration that the first and/or second and/or third defendants hold the sum of $74,400 on trust for the plaintiff; (iv) Tracing of the total sum of $74,400; (v) A declaration that the plaintiff has a right of recoupment in equity against Christos by reason of the relationship of surety to debtor; (vi) A declaration that the plaintiff is subrogated to an equitable mortgage in favour of JJP Custodians over 38 Bull Street (DP 533495, Lot 102); (vii) Equitable compensation; (vii) Damages at general law". 133 The pleading attempts to use unjust enrichment as a cause of action alternative to the common money counts. That is controversial. In Pavey & Matthews, the seminal case in which the High Court rejected the implied contract basis for restitution, the Court did not sweep away the established categories of relief and replace them with unjust enrichment as a single cause of action. Thus, Deane J treated the concept of unjust enrichment as "a unifying legal concept" used to explain why the law recognises obligations in various distinct categories of cases (162 CLR at 256-7). His Honour also took the view that the concept of unjust enrichment could be used to assist in developing the law to recognise an obligation of restitution in a new or developing area (at 257; see also David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353, at 375,389, 406; and Baltic Shipping Co v Dillon (1993) 176 CLR 344, at 376; Sir Anthony Mason, "Contract, Good Faith and Equitable Standards in Fair Dealing", (2000) 116 LQR 66, 92ff). 134 Mason and Carter review the Australian case law up to 1995 and conclude that reference by Australian courts to unjust enrichment is now commonplace and uncontroversial, save where it is invoked in support of a new cause of action (that is, outside the traditional categories), based solely on unjust enrichment (at 30). As far as I can see, that remains the position in Australia in 2002, although Gummow J's judgment in Rothmans could be taken to suggest a preference for equitable concepts such as the concept of unconscionability for the development of new categories of restitutionary relief. 135 In the present state of the law, it may be unsafe to develop a new category of restitutionary relief solely by recourse to the concept of unjust enrichment, and preferable (if development is warranted) to work by reference to close analogies taken from equity or the old law of quasi-contract. 136 If Donald had acted with his father's authority at all times, the case might have presented itself as a candidate for this kind of developmental analysis. It would have been a case where A is induced by fraud to pay C, who appropriates the payment to discharge B's debt to C. the question would be whether, aided by principles of equity or the concept of unjust enrichment, the Court would allow recovery by A from B, although B is not the recipient of A's payment. In terms of unjust enrichment, B would have been enriched by the discharge of his debt, and it might be arguable that the enrichment was unjust, by analogy with cases on mistaken payments (in addition to the David Securities case, such cases as R E Jones Ltd v Waring and Gillow Ltd [1926] All ER Rep 36, Porter v Latec Finance (Qld) Pty Ltd, and Portman Building Society v Hamlyn Taylor Neck). In terms of equitable principles, it might be arguable (drawing by analogy upon some observations by Sir Wilfred Greene MR, dissenting, in Re Cleadon Trust Ltd [1939] 1 Ch 286, 304) that it would be unconscionable for B to seek to retain the benefit of discharge of his debt when he comes to know that the source of the funds for the discharge was a fraudulently induced payment. 137 These fascinating questions, touched upon in argument, do not arise, because of my findings of fact. My findings that Christos did not authorise his son's entry into the loan agreement, or his appropriation of the loan funds to his own use, or his directions to Dr Vickery and JJP to secure repayment of the loan, have important consequences for the restitutionary analysis. They destroy the factual foundation for Dr Vickery's pleading. Paragraph 48 does not accord with the facts because Donald was not, on my findings, the servant or agent of Christos. Paragraph 49 is not correct because the payments were not made on behalf of Christos. Most importantly, paragraph 51 is wrong because the purported repayment of the loan conferred no benefit on Christos, because he was not bound to the loan agreement as borrower. 138 Both parties in their submissions paid much attention to Re Cleadon Trust Ltd [1939] 1 Ch 287. In that case the company owed debts to its subsidiaries, which it had guaranteed. The company and its subsidiaries had the same two directors. Director A paid those debts, at the request of the company secretary. At a meeting of the directors of the parent company, a resolution was passed purporting to confirm the payments, but the decision was not taken in accordance with the company's constitution because director A voted on the motion contrary to a provision preventing interested directors from voting. In the subsequent liquidation of the company, director A sought to recover his payments from the company. 139 The English Court of Appeal held by a majority that he was not entitled to do so. The majority judges (Scott and Clauson LJJ) found that there was no basis for recovery, in the absence of any effective request for payment or any legal compulsion upon director A to make the advance. The majority decision has been criticised by scholars of the law of restitution, principally because it seems to rely on the discredited implied contract theory, and seems to be a case of unjust enrichment warranting a remedy: see Mason and Carter, p 260-263; Lord Goff of Chieveley and Gareth Jones, The Law of Restitution (3rd ed, 1986), p 17-18 (noting especially the explanation of the case offered at footnote 90). 140 Re Cleadon Trust has been cited from time to time, and occasionally followed: for recent examples, see Mailman v Challenge Bank Ltd (1991) 5 BPR 97400; Stefanelli v Emanuelle (Full Court of the Supreme Court of Western Australia, 28 September 1995, BC9504176); Majesty Restaurant Pty Ltd (in liq) v Commonwealth Bank of Australia (Supreme Court of New South Wales, Hunter J, 25 November 1998, BC9807765); Crantrave Ltd v Lloyds Bank plc [2000] 4 All ER 473; Graeme Webb Investments Pty Ltd v St George Partnership Banking Ltd [2001] NSWCA 93. The principle adopted by the majority judgments has been applied elsewhere: Turner v Webb (1941) 42 SR (NSW) 68; Saunders v Leonardi (1976) 1BPR 9409; Detroit Finance Corporation Ltd V Camillo (1974) 4 ACLR 509. Nevertheless, it may be appropriate to revisit the case when the appropriate facts present themselves - not in order to create a new cause of action based upon unjust enrichment, but rather to explore the equitable notions underlying Sir Wilfred Greene's dissenting judgment, in light of new thinking about Sinclair v Brougham [1914] AC 398, a case considered in the judgments of Scott LJ and the Master of the Rolls. 141 However, this is not the occasion to do so. In Re Cleadon Trust the company benefited from the payment of its subsidiaries' debts, both indirectly through the enhancement of the value of its shareholding, and directly by reduction of its guaranteed liability. It was at least arguable that it would be inequitable for the company to retain those benefits while denying any liability to director A. In the present case, Dr Vickery conferred no benefit on Christos, because he was at no stage liable on the loan agreement. 142 My conclusion is that, even if (notwithstanding the preponderance of case law) the pleading identified a cause of action in unjust enrichment, the facts asserted in the pleading have not been made out, and therefore Dr Vickery must fail on this ground. I cannot see that he has any restitutionary cause of action against Christos, on the real facts. Conclusion 143 This is, as I have said, a contest between two innocent victims of fraud. One of them, Christos, has avoided significant loss, on the basis of my findings that his son had no authority to bind him. The other, Dr Vickery, has made a loss at the hands of the son and has proceeded to judgment against the son; he may have also had a cause of action against JJP, prior to the consent judgment in JJP's favour. The law offers him protection in those ways, but it does not give him a cause of action against Christos. In my opinion the proceeding against Christos should be dismissed. 144 I shall hear the parties on the question of costs. **********

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